The current research effort continues to be directed toward 1) the metabolic behavior of the mammalian (rat) lung and 2) ventilation in man during various states of acid-base balance. It is now well established that the mammalian lung is unique in that it can synthesize de novo all the lipid components needed for the formation of the surface alveolar lining layer. It remains uncertain to what extent variations in oxygen tension modify the metabolic reactionsequences involved in the formation of the lipid components of this lining layer. The observations summarized in the Progress Report indicate that inhibition of oxidative metabolism with potassium cyanide will reduce palmitate incorporation into lung lecithin without abolishing it, suggesting that anaerobic production can maintain a limited rate of phospholipid synthesis. Ventilation is increased in acidotic man for partial correction of the acid-base disturbance. Severe metabolic acidosis is associated with elevated o ygen consumption which is out of proportion to the change in the work of breathing resulting from hypertension. A search is under way to establish the mechanisms which raise the basal metabolic rate in acidotic man.